Press Release

American Equity Reports Fourth Quarter 2014 Results

WEST DES MOINES, Iowa--(BUSINESS WIRE)--Feb. 12, 2015--
American Equity Investment Life Holding Company (NYSE: AEL), a leading
issuer of fixed index annuities, today reported fourth quarter 2014 net
income of $31.2 million, or $0.39 per diluted common share, compared to
fourth quarter 2013 net income of $51.0 million, or $0.64 per diluted
common share.

Non-GAAP operating income1 for the fourth quarter of 2014 was
$50.7 million, or $0.63 per diluted common share, compared to fourth
quarter 2013 non-GAAP operating income1 of $39.8 million, or
$0.50 per diluted common share.

Book value per share (excluding accumulated other comprehensive
income) was $18.52 at December 31, 2014 compared to $19.10 at
September 30, 2014 and $18.75 at December 31, 2013.

Paid annual cash dividend of $0.20 per share, an 11% increase from the
previous year. This marks the 16th consecutive year a cash
dividend has been paid and the 11th consecutive year the
annual cash dividend amount has been increased.

1

In addition to net income, we have consistently utilized operating
income and operating income per common share - assuming dilution,
non-GAAP financial measures commonly used in the life insurance
industry, as economic measures to evaluate our financial
performance. See accompanying tables for reconciliations of net
income to operating income and descriptions of reconciling items.
See Company’s Annual Report on Form 10-K for a more complete
discussion of the reconciling items and their impact on net income
for the periods presented. Because these items fluctuate from period
to period in a manner unrelated to core operations, we believe
measures excluding their impact are useful in analyzing operating
trends. We believe the combined presentation and evaluation of
operating income together with net income, provides information that
may enhance an investor’s understanding of our underlying results
and profitability.

Commenting on results and the outlook for American Equity, founder and
Executive Chairman David J. Noble said: “Our fourth quarter results
capped off another year in which our non-GAAP operating income1 and
the related per share amount were record highs. Fourth quarter sales of
$1.15 billion pushed our 2014 full year sales up close to $4.2 billion
and give us excellent momentum heading into 2015. For the year, we
delivered 12% growth in policyholder funds under management, a 14%
non-GAAP operating return1 on average equity and increased
the cushion to our targeted RBC ratio. Over the past ten years, our
non-GAAP operating income1 has compounded at a 16% annual
rate while policyholder funds under management have grown 17% annually.
This track record classifies us as one of the best growth stories of the
past decade, especially in the insurance and financial services
industries. We look forward to delivering more growth for our
shareholders in the years ahead."

Noble continued, "We owe our success to delivering attractive products
that meet the needs of Americans preparing for or enjoying their
retirement. Serving the retirement savings and income needs of our
policyholders is the reason my partners at American Equity come to work
each day, and will continue to be our motivation for years to come.
American Equity has been in the top three of fixed index annuity sales
in 14 of the last 15 years. Our commitment to consistency in our
business practices and providing best in class service to our agents and
policyholders gives us a strong foundation in the independent agent
distribution channel. We are building on that foundation by expanding
our distribution into broker-dealers and banks. While we believe
independent agents will continue to be a significant source of our
future fixed index annuity sales, we expect meaningful sales from new
distribution sources in 2015 to contribute to sales and policyholder
funds under management growth."

SPREAD WIDENS BUT LOW INTEREST RATES REMAIN A HEADWIND TO 3% TARGET

American Equity’s investment spread widened to 2.92% for the fourth
quarter of 2014 compared to 2.82% for the third quarter of 2014, as a
result of an increase in the average yield on invested assets and a
decline in the cost of money.

Average yield on invested assets grew by 6 basis points to 4.95% for the
fourth quarter of 2014 from 4.89% for the third quarter of 2014. Much of
this increase was attributable to fee income from bond transactions
which together with certain prepayment income added 0.13% to the fourth
quarter 2014 average yield on invested assets compared to 0.07% from
such items in the third quarter of 2014. Cash and short-term investments
were at normal operating levels for much of the fourth quarter and above
normal operating levels for much of the third quarter. The average
balance for excess cash and short-term investments for the fourth
quarter of 2014 was $116 million compared to $656 million for the third
quarter of 2014.

Adjusting for the effect of these non-trendable items, the average yield
on invested assets for the quarter fell by 7 basis points from the prior
quarter as new premiums and portfolio cash flows were invested at rates
below the portfolio rate. The average yield on fixed income securities
purchased and commercial mortgage loans funded in the fourth quarter of
2014 was 4.27%, compared to average yields of 4.14%, 4.15% and 4.39% in
the third, second and first quarters of 2014, respectively.

The aggregate cost of money for annuity liabilities declined by 4 basis
points to 2.03% in the fourth quarter of 2014 compared to 2.07% in the
third quarter of 2014. This decrease reflected continued reductions in
crediting rates. The benefit from over hedging the obligations for index
linked interest was 0.05% in both the fourth and third quarters of 2014.

Commenting on investment spread, John Matovina, Chief Executive Officer
and President, said: “Similar to the third quarter, bond fees and
prepayment income together with the benefit from over hedging benefited
our spread. However, low interest rates remain a headwind to our spread
management and the benefit we received in the quarter from reductions in
liability rates was offset by lower rates on invested assets purchased
or funded. Our spread success ultimately depends on finding suitable
investments with acceptable yields combined with appropriate management
of the rates on our policy liabilities. Spread management may be more
challenging in 2015. Investment yields have moved lower in the first
several weeks of 2015 and achieving a 4.00% average yield on new
investments is not possible without taking on risk that is beyond our
comfort level. Conversely, we continue to have flexibility in managing
our cost of money. Competitive conditions have eased somewhat as several
of our key competitors have recently reduced the terms of their new
product offerings. We are in the process of reducing our new money rates
and will be actively managing renewal rates should the investment yields
currently available to us persist.”

CONVERTIBLE DEBT RETIREMENTS REDUCE DEBT-TO-CAPITAL RATIO TO 20.2%

The Company retired $55.2 million principal amount of its convertible
notes in the fourth quarter of 2014 and ended 2014 with $22.4 million
principal amount of its 3.50% convertible notes outstanding. The total
consideration paid by the Company for the fourth quarter retirements
included $99.4 million of cash and 1,515,939 shares of the Company's
common stock. The remaining 3.50% convertible notes mature in September
2015 and will be retired at maturity if not redeemed or repurchased
prior to that date. The holding company has sufficient cash on hand and
cash resources to retire the remaining 3.50% convertible notes without
accessing external sources of capital such as its bank line of credit or
dividends from its primary insurance subsidiary.

The fourth quarter convertible debt retirements contributed to the
reduction in the Company's adjusted debt / total capitalization ratio to
20.2%. The Company has substantially met its goal of reducing this
ratio, which was 31.9% at September 30, 2013 following the July 2013
senior notes offering, to its 20% target ratio. Standard & Poors'
capital model requires additional capital for companies whose adjusted
debt / total capitalization ratio exceeds 20%. Reducing the
debt-to-capital ratio below 20% will be a positive factor in the
determination of the ratings Standard & Poors assigns to the Company and
its subsidiaries.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements within the
meaning of The Private Securities Litigation Reform Act of 1995.
Forward-looking statements relate to future operations, strategies,
financial results or other developments, and are subject to assumptions,
risks and uncertainties. Statements such as “guidance”, “expect”,
“anticipate”, “believe”, “goal”, “objective”, “target”, “may”, “should”,
“estimate”, “projects” or similar words as well as specific projections
of future results qualify as forward-looking statements. Factors that
may cause our actual results to differ materially from those
contemplated by these forward looking statements can be found in the
company’s Form 10-K filed with the Securities and Exchange Commission.
Forward-looking statements speak only as of the date the statement was
made and the company undertakes no obligation to update such
forward-looking statements. There can be no assurance that other factors
not currently anticipated by the company will not materially and
adversely affect our results of operations. Investors are cautioned not
to place undue reliance on any forward-looking statements made by us or
on our behalf.

CONFERENCE CALL

American Equity will hold a conference call to discuss fourth quarter
2014 earnings on Friday, February 13, 2015, at 9:00 a.m. CST. The
conference call will be webcast live on the Internet. Investors and
interested parties who wish to listen to the call on the Internet may do
so at www.american-equity.com.

The call may also be accessed by telephone at 877-280-4961, passcode
71403973 (international callers, please dial 857-244-7318). An audio
replay will be available shortly after the call on AEL’s website. An
audio replay will also be available via telephone through February 20,
2015 at 1-888-286-8010, passcode 34617948 (international callers will
need to dial 617-801-6888).

ABOUT AMERICAN EQUITY

American Equity Investment Life Holding Company, through its
wholly-owned operating subsidiaries, issues fixed annuity and life
insurance products, with a primary emphasis on the sale of fixed index
and fixed rate annuities. American Equity Investment Life Holding
Company, a New York Stock Exchange Listed company (NYSE: AEL), is
headquartered in West Des Moines, Iowa. For more information, please
visit www.american-equity.com.

In addition to net income, we have consistently utilized operating
income and operating income per common share - assuming dilution,
non-GAAP financial measures commonly used in the life insurance
industry, as economic measures to evaluate our financial performance.
Operating income equals net income adjusted to eliminate the impact of
net realized gains and losses on investments including net OTTI losses
recognized in operations, fair value changes in derivatives and embedded
derivatives, loss on extinguishment of debt and changes in litigation
reserves. Because these items fluctuate from quarter to quarter in a
manner unrelated to core operations, we believe measures excluding their
impact are useful in analyzing operating trends. We believe the combined
presentation and evaluation of operating income together with net income
provides information that may enhance an investor’s understanding of our
underlying results and profitability.

Adjustments to net income to arrive at operating income are
presented net of income taxes and where applicable, are net of
related adjustments to amortization of deferred sales inducements
(DSI) and deferred policy acquisition costs (DAC).

American Equity Investment Life Holding Company

NON-GAAP FINANCIAL MEASURES

Average Stockholders' Equity and Return on
Average Equity (Unaudited)

Return on equity measures how efficiently we generate profits from the
resources provided by our net assets. Return on equity is calculated by
dividing net income and operating income for the trailing twelve months
by average equity excluding average accumulated other comprehensive
income ("AOCI").

Twelve Months Ended

December 31, 2014

(Dollars in thousands)

Average Stockholders' Equity 1

Average equity including average AOCI

$

1,762,282

Average AOCI

(383,799

)

Average equity excluding average AOCI

$

1,378,483

Net income

$

126,023

Operating income

190,646

Return on Average Equity Excluding Average AOCI

Net income

9.14

%

Operating income

13.83

%

1 - simple average based on stockholders' equity at beginning and end of
the twelve month period.